- The market capitalization (market price) of bitcoin is divided by its realized capitalization (realized price, average “purchase” price for all bitcoin holders).
- The MVRV ratio measures whether the bitcoin price is undervalued (cheap) or overvalued (expensive).
- When MVRV is above 3.7 (red area) bitcoin is said to be overvalued (market tops); when it is below 1 (green area), bitcoin is said to be undervalued (market bottom).
- MVRV is currently above 1 (1.07) and close to its 365-day moving average (orange line), signaling Bitcoin is closer to starting a new upward cycle.
